Trading Update: Tuesday May 30, 2023
S&P Emini pre-open market analysis
Emini daily chart
- Emini strong bull reversal last Friday, testing the May 19th high. This reversal up is strong enough to increase the odds of a second leg up and a test of the February high.
- The bulls have a chance to get a strong upside breakout. There are bears trapped who sold a pullback from the breakout down to May 24th. Those bears all got trapped by last Friday’s bull breakout.
- Last Friday’s bull breakout was strong enough to get at least a small 2nd leg up.
- The bears that are holding a losing position will probably be more than happy to exit their trade with a smaller loss. This increases the risk of the bulls squeezing the bears out of losing shorts.
- This means traders will pay close attention to the next few days to see if the bears will get squeezed out.
- There will be bears selling up here, trying to trap the bulls and make the market reverse down.
- While the bulls have the potential to get a strong upside breakout, they do not have it yet. This means that the bears have not given up yet.
- However, it would not take much for the remaining bears to get up. The size of last Friday’s breakout alone is a sign of bears buying back shorts. However, as I said earlier, bears will still try and prevent the bulls from getting follow-through.
- Overall, the bulls need to get follow-through buying today, and the bears need to prevent it. Traders will pay close attention to how determined the bulls are to get the upside breakout. If the bulls can get follow-through buying today, more bears will probably exit their longs.
Emini 5-minute chart and what to expect today
- Emini is up 20 points in the overnight Globex session.
- The overnight Globex market rallied and is trying to get above yesterday’s Globex high.
- While traders should assume that today will have a lot of trading range price action, the bulls have decent potential to get a bull trend day. As I mentioned above, the bulls will try their best to get follow-through buying today, and the bears will try and prevent it.
- As I often say, traders should assume the first 6-12 bars will probably go sideways. This means that most traders should not be too eager to trade the opening bars unless they are comfortable with limit order trading.
- The open often has several reversals, and it is easy to take a couple of losses early in the day. Then a trader will spend the rest of the day with the goal to get back to breakeven on the day.
- If a trader is patient, they gain the probability of catching the low/high of the day and will have more certainty of the day.
- Most traders should try and catch the opening swing that often begins after the formation of a double top/bottom or a wedge top/bottom. The opening swing often begins within the first 2 hours of the day.
- Lastly, traders should pay close attention to the day’s open, especially if the day has a lot of trading range price action.
Emini intraday market update
- The Emini gapped up and sold off in a bear trend from the open.
- The bulls were able to develop decent buying pressure during the first 24 bars, lowering the probability of the bear trend lasting all day.
- By bar 23 (8:25 AM PT), the market tried to get a strong downside bear breakout. However, the bulls at this point had developed too much buying pressure, and the bear took the opportunity to take final profits at a new low, and the bulls began to buy to establish long positions.
- The Bulls got a strong reversal up to bar 26 (8:40 AM PT). This reversal up is strong enough to have a second leg likely.
- The market may have to test the bar 10 close. It was a reasonable buy-the-close bar. It was not an idea since it was a pullback in a tight bear channel. However, the bulls who bought bar 10 close never had a chance to exit breakeven after the bar 11 disappointment bar. This increases the odds that the market will have to get back to bar 11 close to relieve the trapped bulls.
Friday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD is forming a parabolic wedge bottom (purple line) after testing the March 24th low.
- The bulls want a strong reversal up; however, as I have said several times, the selloff from the May high is tight. This increases the odds that the first reversal up will be minor.
- It is reasonable for the bears to exit above today’s bar due to the risk of the pullback being deeper than what the bulls would want to hold through.
- The market has been in a tight bear channel within a trading range for several bars. Even though the bear channel is tight, traders cannot be in denial if the bulls start to get 2-3 consecutive strong bull closes. Even if the bulls get strong closes, the odds favor more sideways trading.
Summary of today’s S&P Emini price action
Al created the SP500 Emini charts.
End of day video review
Today’s End Of Day review will be presented in the Trading Room and only available to the trading room subscribers.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
Charts use Pacific Time
When times are mentioned, it is USA Pacific Time. The Emini day session charts begin at 6:30 am PT and end at 1:15 pm PT which is 15 minutes after the NYSE closes. You can read background information on the market reports on the Market Update page.